The US banking crisis is far from over and will have repercussions for years to come, says JP Morgan Chase chief
- Jamie Dimon said it is not clear when the current crisis will end
- He said rules encouraged banks to build large portfolios of US bonds
The US banking crisis continues and will have repercussions for years to come, said Jamie Dimon, chief of JP Morgan Chase.
“The current crisis is not over yet, and even if it is behind us, it will have repercussions for years to come,” the Wall Street veteran wrote in his 43-page annual letter to shareholders.
Storm clouds still threaten the economy, he added. And the banking system is under pressure again after the failure of UBS’ rescue of Silicon Valley Bank and Credit Suisse last month.
JP Morgan Chase chief Jamie Dimon said the likelihood of a market recession has increased
“The likelihood of a market recession has increased,” Dimon wrote.
And while this is nothing like 2008, it’s not clear when this current crisis will end. It has caused much turmoil in the market and will clearly lead to some tightening of financial conditions as banks and other lenders become more conservative.”
And in an attack on regulators, the 67-year-old said the risks that led to the current crisis were “hiding in plain sight.”
Dimon said rules encouraged banks to build large portfolios of US government debt — or government bonds — that fell in value when the US Federal Reserve raised interest rates.
This caused banks to suffer huge losses that scared the hell out of investors.
He turned on the Fed, saying stress tests of the banking system “never accounted for interest rates at higher levels.”